STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PROCACCI FINANCIAL GROUP, LTD., ) PROCACCI COMMERCIAL REALTY, INC., )

its General Partner, )

)

Petitioner, )

)

vs. ) CASE NO. 92-2650BID

) FLORIDA DEPARTMENT OF LABOR AND ) EMPLOYMENT SECURITY, an agency )

of the State of Florida, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on May 6, 1992, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Robert A. Sweetapple, Esquire

Sweetapple, Broeker & Varkas, P.A.

465 East Palmetto Park Road Boca Raton, Florida 33432

For Respondent: Edward A. Dion, Esquire

Assistant General Counsel Department of Labor and

Employment Security Suite 307

2012 Capital Circle, S.E. Tallahassee, Florida 32399-0657

STATEMENT OF THE ISSUES

Whether Respondent's rejection of all bids for Lease No. 540:0920 was improper.

PRELIMINARY STATEMENT

These proceedings followed Petitioner's timely protest of Respondent's announcement that it intended to reject all responses to an invitation to bid pertaining to the leasing of office space in Broward County, Florida (Lease No. 540:0920). The Respondent was seeking to lease approximately 9,907 square feet of office space in Broward County. A total of five bids were received as follows:

1. Taft Associates Joint Venture (Taft)

2. Connie C. Donlon (Donlon)

3. Procacci Financial Group Ltd. (Procacci)

4. In-Rel Acquisition, Inc. (In-Rel)

5. Stirlingwood Developers (Stirlingwood)

For purposes of the hearing only, the parties stipulated that the bids of Taft and In-Rel were non-responsive and that the bids of Donlon, Procacci, and Stirlingwood were responsive.

At the hearing, Petitioner presented the testimony of Lynn Mobley, Don Walker, Mary Goodman and Philip Procacci. Ms. Mobley is the manager of Respondent's statewide leasing operations. Mr. Walker is Respondent's area administrator for the area that includes Broward County. Ms. Goodman was, at the times pertinent to this proceeding, the chief bureau project manager for the Department of General Services. Ms. Goodman was accepted as an expert witness in the area of the procurement of leased space by a state agency from the private sector through the bid process. The parties offered five Joint Exhibits and Petitioner offered seven additional exhibits. All exhibits offered were accepted into evidence. The Respondent presented no additional testimony and no other exhibits.

A transcript of the proceedings has been filed. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. The Respondent published an invitation to bid seeking to lease approximately 9,907 net square feet of office space in Broward County (the Lease). There was no evidence of any irregularities in the preparation or the issuance of the invitation.

   
   

2. The Petitioner, whose responsive bid was rejected by Respondent, timely and properly brought its protest and has standing to protest the Respondent's rejection of all bids for the Lease.

   
   

3. Lynn Mobley was the statewide lease manager of the Respondent and had the responsibility to generally oversee the preparation of the bid package and the bid opening procedures. Barbara Lollie was a staff member under the supervision of Ms. Mobley and was in charge of the preparation of the request for bid proposals. Ms. Mobley's supervisor was a Ms. Barron.

   
   

4. Five bids in response to the invitation to bid were duly received by Respondent. An evaluation committee chaired by Don Walker, Respondent's area administrator, was appointed to inspect the proposed properties and to evaluate the bids. The evaluation committee ranked the bids in the following order of preference: 1/

   1. In-Rel	($499,141.80)
   2. Taft	($519,090.30)
   3. Donlon	($541,119.90)
   4. Procacci	($618,373.30)
   5. Stirlingwood	($761,906.30)

   
   

5. Thereafter the responses to the invitation were forwarded to Ms. Mobley's office for evaluation. Ms. Mobley's staff determined that the top two bids, those of In-Rel and Taft, were non-responsive. 2/ Ms. Mobley, who did not actively participate in the evaluation of the proposals, then advised Mr. Walker of that determination and advised him of two alternatives: to award the bid to the lowest responsive bidder or to reject all bids and re-advertise. The evaluation committee chaired by Mr. Walker had wanted to lease the property to either In-Rel or Taft. Mr. Walker told Ms. Mobley that he wanted to reject all bids and to re-advertise.

   
   

6. Pursuant to the request for bids promulgated by the Respondent and Rule 13M-1.015, Florida Administrative Code, the Respondent reserved the right to reject any and all bid proposals for the Lease. The request for proposal of bids specifically stated:

   
   

   The Department reserves the right to reject any and all bid proposals for reasons which shall include but not be limited to the agency's budgetary constraints; waive any minor informality or technicality in bids, to accept that bid deemed to be the lowest and in the best interest of the State, and if necessary, to reinstate procedures for soliciting competitive proposals.

   
   

7. Following the telephone conversation between Mr. Walker and Ms. Mobley, Ms. Mobley sent a letter dated March 23, 1992, to all bidders which notified each bidder that all bids had been rejected. That letter did not state the reasons for the rejection of all bids. Mr. Walker sent a memo on March 20, 1992, to Ms. Lollie recommending the rejection of all bids. Although this memo predated the rejection letter and was subsequently made available to Ms. Mobley, the memo was received by Ms. Mobley's office after the rejection letter had been sent. The memo gave no explication of Mr. Walker's reasons for wanting to reject all bids.

   
   

8. The Department of General Services (DGS) published lease rate guidelines for Broward County to inform the Respondent of maximum acceptable lease rates. The purpose of these DGS guidelines was to advise the Respondent that proposed lease rates above the guidelines would be summarily rejected. At the time of obtaining bid proposals, the DGS lease rate guidelines were the only established guidelines which could be consulted by the Respondent. At no time did the Respondent calculate a pre-bid estimate of what the Respondent felt was an acceptable range of lease rates in order to be used in determining whether lease rates were too high. The Petitioner's bid, along with the other responsive bidders, were within the DGS lease rate guidelines.

   
   

9. Mr. Walker made the request for re-bid after he learned that the bids of Taft and In-Rel were non-responsive. Mr. Walker's decision to recommend the rejection of all bids was based only on the information that the two top choices of the evaluation committee had been found to be non-responsive and on his desire to reopen the bid process in the hope of attracting more bidders. 3/

10. Mr. Walker wanted to modify the specifications of the invitation to bid in two regards. First, he wanted to amend the specifications to permit the leased premises to be in more than one building. Second, he wanted the geographical boundaries in which the leased premises could be located to be expanded to hopefully attract additional bidders.

    
    

11. Mr. Walker believed that a re-bid would provide a wider range of buildings at comparable prices from which to choose and would give him an opportunity to make changes to the bid specifications. His decision to recommend the rejection of all bids was not based on a lease bid analysis or on lease rate guidelines. The recommendation was not dictated by budgetary considerations, but by his desire to shop the bid.

    
    

12. It was Mr. Walker's understanding that at the end of his telephone conversation with Ms. Mobley that the decision to reject all bids had been made and that all bids would be rejected.

    
    

13. Ms. Mobley made the decision to reject all bids pursuant to the recommendation of Mr. Walker after obtaining input from Ms. Lollie and Ms. Barron. Although Ms. Mobley had Ms. Lollie's analysis of the five bids, that analysis made no comparison of the rates contained in the bids with existing lease rates or the DGS guidelines. Ms. Mobley did not consult the DGS lease rate guidelines, although she was generally familiar with those guidelines, and she was unaware of any budgetary constraints that would dictate the rejection of all bids. When Ms. Mobley decided to reject all bids, she did not compare the bid proposals to the existing lease rates paid by the Respondent for leased office space in Broward County. The decision to reject all bids was not made on the advice of an attorney.

    
    

14. Although Ms. Mobley testified that all bids on the Lease were rejected solely for price considerations, the evidence presented established that the decision to reject all bids was not based on price, price guidelines, or the Respondent's budgeting constraints. The greater weight of the evidence establishes that Ms. Mobley rejected all bids because that was the action recommended by Mr. Walker.

    
    

15. Respondent's invitation to bid did not contain any lease rate guidelines that would notify prospective bidders of a lease rate ceiling.

    
    

16. There was no significant difference in the lease rates between the Taft and In-Rel bids that were favored but non-responsive and the third lowest bidder, the Donlon bid, which was responsive but rejected. Mr. Walker conceded that the Donlon bid was not rejected because of price considerations. Mr. Walker was of the opinion that the Donlon bid was at an acceptable price. He did not testify that the Petitioner's bid was at an unacceptable price and he did not testify as to what, other than the DGS guidelines, would be the maximum acceptable price.

    
    

17. The DGS Lease Guidelines applicable to the bid for the Lease were as follows:

    
    

    1. A full service Lease (including electricity) -- $17.84 a square foot. 4/

    2. Lease without electricity --

       $15.18 a square foot.

18. The present rate for the existing lease which was to be replaced by the Lease was $16.60 a square foot; this rate did not include electricity. If electricity was factored in at $2.50 a square foot, which was a factor regularly used by DGS, the present lease rate would be approximately $18.00 a square foot. The three responsive bids to the invitation were lower than the present lease after factoring in electricity.

    
    

19. Ms. Goodman was of the opinion that Respondent's budget with respect to the Lease would be based on lease rates already in existence and consequently, that the responsive bids received and rejected were within the budget guidelines. Respondent offered no evidence to controvert that opinion. There was no evidence that the decision to reject all bids was based on economic considerations.

    
    

20. All lease rates submitted by the rejected bidders were under the ceiling set by the DGS lease guidelines of $17.84.

    
    

21. The Respondent acted arbitrarily when it rejected all bids.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes (1990).

    
    

23. Section 255.25(3), Florida Statutes and Rule 13M-1.105(1), Florida Administrative Code, provide that no state agency shall enter into a lease for 2,000 square feet or more of office space in a privately owned building except by advertisement and receipt of competitive bids and an award to the lowest and best bidder.

    
    

24. Part I of Chapter 287, Florida Statutes, pertains to the procurement of contractual services by agencies of the State of Florida.

    
    

25. Section 287.012(13), Florida Statutes, provides the following definition of the term "responsive bidder":

    
    

    (13) "Responsive bidder" or "responsive offeror" means a person who has submitted a bid which conforms in all material respects

    to the invitation to bid or request for proposals.

    
    

26. The purpose of the competitive bidding laws has been discussed by the Florida Supreme Court in Wester v. Belote, 103 Fla. 976, 138 So. 721, at 724 (Fla. 1931) as follows:

    
    

    ... [T]hey thus serve the object of protecting the public against collusive contracts and prevent favoritism toward contractors by public officials and tend to secure fair competition upon equal terms to all bidders, they remove temptation on the part of public officers to seek private gain at the taxpayers's expense, are of highly remedial character, and should receive a construction always which will fully effectuate and advance their true intent and purpose and which will

    avoid the likelihood of same being circumvented, evaded, or defeated.

    
    

    Compare, Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1192 (Fla. 2nd DCA 1977).

    
    

27. The basic principles of the competitive bidding process are stated in Hotel China & Glassware Co. v. Board of Public Instruction, 130 So.2d 78, 81 (Fla. 1st DCA 1961), as follows:

    
    

    ... Competitive bidding statutes are enacted for the protection of the public. They create a system by which goods or services required by public authorities may be acquired at the lowest possible cost. The system confers upon both the contractor and the public authority reciprocal benefits, and exacts from each of them reciprocal obligations. The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. The principle benefit flowing to the public authority is

    the opportunity of purchasing the goods and services required by it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference. ...

    (Footnote omitted).

    
    

28. An agency has wide discretion in soliciting and accepting bids, and its decision, if based on an honest exercise of this discretion, will not be overturned even if reasonable persons may differ with the outcome. C. H. Barco Contracting Co. v. State, Dept. of Transportation, 483 So.2d 796 (Fla. 1st DCA 1986); Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So. 2d 505 (Fla. 1982). The request for bid proposal form promulgated by the Respondent reserves the right to the Respondent to reject all bids for reasons including but not limited to the Respondent's budgetary constraints. The exercise of that right is not without limitation.

    
    

29. It is well-established that a public authority may not arbitrarily or capriciously reject responsive bids. D.O.T. v. Groves-Watkins Construction, 530 So.2d 912 (Fla. 1988). The agency soliciting bids must have a rational basis for rejecting responsive bids because once the content of a bid is published, subsequent bidders are notified of the competitor's rates as this information would give those competitors an advantage in any re-bidding. To permit the soliciting agency to arbitrarily reject responsive bids would undermine and eventually destroy the integrity of the competitive bid process. The purpose of having a "good cause" rationale for the rejection bids is to force bidders to take their "best shot" knowing that this may be the bidder's only chance to receive a lease award.

    
    

30. Respondent's desire to rebid because Mr. Walker was of the opinion that more bidders should have responded to the invitation does not justify the rejection of all bids. Although Mr. Walker was of the view that more bidders should have responded to the invitation to bid, the greater weight of the

    evidence established that the invitation was appropriately advertised and that an adequate number of bids were received in response to the invitation.

    
    

31. There was no testimony that the original bid specifications failed to fairly set forth the Respondent's requirements for the project. After the invitation to bid has been published and bids have been received and made public, the desire to modify the specifications by Mr. Walker does not provide a reasonable basis to reject the bids that were responsive to the invitation to bid.

    
    

32. The evidence demonstrated that neither price guidelines, pre-bid estimates, presently paid lease rates, nor budgeting constraints were referred to in order to justify the decision. While such factors may, under appropriate circumstances, justify the rejection of all bids, those factors do not provide the required "rational basis" or "good cause" for the rejection of the responsive bids for the Lease in this proceeding. Respondent has failed to establish that it acted within the scope of its discretion or that its articulated "rational basis" or "good cause" was genuine. Its action in rejecting all bids was arbitrary as that term is commonly defined.

    
    

33. The role of the undersigned is to ascertain whether Respondent acted with the requisite "rational basis" or "good cause" in rejecting all bids. The Court, in Groves-Watkins, supra, at 914, phrased that responsibility as follows:

    
    

    Thus, although the APA provides the procedural mechanism for challenging an agency's decision to award or reject all bids, the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted. In short, the hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly.

    
    

34. While it is clear that the employees of the Respondent who made the recommendations and the decisions pertaining to this bid acted in what those employees perceived to be in the best interest of the Respondent, the evidence established that Respondent acted arbitrarily in rejecting all bids for the Lease. The effect of the arbitrary rejection was to defeat the object and integrity of competitive bidding for the Lease.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusion of law, it is hereby recommended that the Respondent accept and evaluate the responsive bids submitted for the Lease and determine the proper recipient for an award of the Lease.

RECOMMENDED this 29th day of June, 1992, in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 1992.

ENDNOTES

1/ The figure appearing in parentheses after the name of each bidder is the sum of the present value for that bidder's proposal for the initial five-year term of the lease.

2/ One of these bids was non-responsive because the proposed office space was located in two separate buildings. The other bid was non-responsive because it did not offer enough space. The record was not clear as to which bid had which defect.

3/ The evidence established that the procedures for advertising were followed and that five bids for the project was an adequate response to the invitation. Opportunity was given for all eligible bidders to participate in the bidding for the lease.

4/ The Lease, subject of the instant action, was a full service lease.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2650BID

The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner.

1. The proposed findings of fact in paragraphs 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 14, 15, 16, 19, and 20 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraphs 5, 12, 13, 19, 20, and 21 are accepted in part. Those proposed findings not accepted are rejected as being subordinate to the findings made.

3. The proposed findings of fact in paragraphs 17, 18, 25, and 26 are rejected as being subordinate to the findings made.

4. The proposed findings of fact in paragraphs 22 and 23 are rejected as findings of fact, but are incorporated as conclusions of law.

5. The proposed findings of fact in paragraph 24 are rejected as being subordinate to the conclusions of law made.

The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent.

1. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, and

   10 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraphs 11 and 13 are rejected as being subordinate to the findings made.

3. The proposed findings of fact in paragraph 12 are rejected as being unnecessary to the conclusions reached.

COPIES FURNISHED:

Robert A. Sweetapple, Esquire Sweetapple, Broeker & Varkas, P.A.

465 East Palmetto Park Road Boca Raton, Florida 33432

Edward A. Dion

Assistant General Counsel Department of Labor and

Employment Security Suite 307

2012 Capital Circle, S.E. Tallahassee, Florida 32399-0657

Frank Scruggs, Secretary Department of Labor and

Employment Security

303 Hartman Building

2012 Capital Circle Southeast Tallahassee, Florida 32399-2152

Cecilia Renn, Chief Legal Counsel Department of Labor and

Employment Security

307 Hartman Building

2012 Capital Circle Southeast Tallahassee, Florida 32399-2152

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PROCACCI FINANCIAL GROUP, LTD., PROCACCI COMMERCIAL REALTY, INC.,

its General Partner,

Petitioners,

vs. CASE NO.: 92-2650BID

DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY,

Respondent.

/

FINAL ORDER

This cause involves a formal protest by Petitioner, PROCACCI FINANCIAL GROUP, LTD., PROCACCI COMMERCIAL REALTY, INC., its General Partner (PROCACCI),

challenging the decision by Respondent, DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY (DLES) to reject all bids that it received in response to a request for proposals for office space in Hollywood, Florida. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in this cause submitted a Recommended Order to DLES, a copy of which is attached and incorporated by reference. DLES timely submitted exceptions to the Recommended Order. PROCACCI filed Memorandum in Response to DLES's exceptions. The cause came to me for the purpose of issuing a final order.

1. Rulings on Exceptions to Findings of Fact

   
   

   Finding of Fact No. 9. The hearing officer found that "[t]he evidence established ... that five bids for the project was an adequate response to the invitation." Recommended Order at 6 n.3. DLES contends that the record contains no competent substantial evidence to support the finding. I disagree.

   
   

   The evidence most favorable to DLES was provided by Mr. Don Walker, Area Administrator, Division of Unemployment Compensation, DLES, who testified that DLES rejected all bids, in part, because it expected more bids during a recession in a large metropolitan area. Tr. 73. Indeed, Mr. Walker stated that DLES received ten bids in response to an unrelated request for proposals in Delray. Tr. 73. However, Mary V. Goodman, Chief of the Bureau of Property Management, Department of General Services, who was accepted as an expert over DLES objection, expressed the opinion that five bids in the Hollywood area was an adequate number in the current market. Tr. 114.

   
   

   The administrative procedure act requires the agency to accept the factual findings of the hearing officer that are supported in the record by competent substantial evidence. 120.57(1)(b)10, Fla. Stat. (1991); Heifetz v. Department

   of Business Regulation, Div. Alcoholic Beverages & Tobacco, 475 So.2d 1277, 1281 (Fla. 1st DCA 1985). Ms. Goodman's testimony could support finding of fact number 9. Therefore, I rule that the finding is based on competent substantial evidence in the record and reject DLES's exception. See id. (defining "competent substantial evidence" as "`such evidence as will establish a substantial basis of fact from which the fact at issue can be reasonably inferred' or such evidence as is `sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached")(citation omitted).

   
   

   Finding of Fact No. 10. DLES's exception pertains to the following finding:

   
   

   Mr. Walker[, DLES Area Administrator,] wanted to modify the specifications of the invitation to bid in two regards. First, he wanted to amend the specifications to permit the leased premises to be in more than one building. Second, he wanted the geographical boundaries in which the leased premises could be located to be expanded to hopefully attract additional bidders.

   
   

   Recommended Order at 6. DLES contends that the record lacks adequate support for this finding. DLES correctly notes that Mr. Walker testified that by rejecting all bids DLES intended to provide a wider range of buildings at potentially comparable rental rates. Tr. 72-73. Moreover, the decision to rebid was thought to promote the best interests of DLES, Tr. 41, 45, and occurred after DLES determined that the two lowest bids of the five proposals received were ranked the highest by the evaluation committee, Petitioner's Exhibits 1 and 2, and that those two bids were nonresponsive. Tr. 65.

   
   

   However, Mr. Walker testified that he discussed with Ms. Barbara Lollie, DLES Bureau of Purchasing and Support Services, the possibility of amending the specifications to change the boundaries of the bid territory and to eliminate the single building restriction. Tr. 71. Mr. Walker also advised Ms. Lollie by memorandum dated March 20, 1992: "When space is rebid we will be requesting changes to the specifications. Those changes will be forthcoming." Joint Exh.

   2. For these reasons, I find that substantial competent evidence exists on the record to support the finding of the hearing officer. Accordingly, I reject DLES's exception.

   
   

2. Rulings on Exceptions to Conclusions of Law

   
   

   Conclusion of Law No. 10. DLES objects to a portion of Conclusion of Law No. 10, which provides:

   
   

   After the invitation to bid has been published and bids have been received and made public, the desire to modify the specifications by Mr. Walker does not provide a reasonable basis to reject the bids that were responsive to the invitation to bid.

   
   

   Recommended Order at 12. DLES's argument is predicated on its claim that Finding of Fact No. 10 was erroneous. Having concluded, above, that the record adequately supported that factual finding, I reject DLES's exception here.

   
   

   Conclusion of Law No. 11. This conclusion provides:

   [DLES] has failed to establish that it acted within the scope of its discretion or that its articulated "rational basis" or "good cause" was genuine. Its action in rejecting all bids was arbitrary as that term is commonly defined.

   
   

   Recommended Order at 12. DLES contends that the hearing officer erroneously imposed on DLES the burden of proving the rationality of its choice. DLES asserts that the burden of proof should have been on PROCACCI, as the petitioner, to establish that DLES's decision to rebid was arbitrary, capricious, illegal, or violative of established procedures. For this proposition, DLES cites Florida Dep't of Transp. v. J.W.C. Co. Inc., 396 So.2d 778 (Fla. 1st DCA 1981). I agree that J.W.C. is relevant to issue of which party has the burden of proof, but the decision does not compel the result urged by DLES.

   
   

   In J.W.C., the Department of Transportation (DOT) applied for a permit from the Department of Environmental Regulation (DER) to widen a boulevard. DER issued a letter of intent after DOT provided "reasonable assurances" under DER's rule, demonstrating that automobile exhaust fumes from the project would not exceed DER air pollution standards. Various property owners objected to the proposed issuance of the permit to DOT. Following formal administrative hearing, a hearing officer denied DOT's permit. DOT appealed the administrative ruling, arguing in part, that the hearing officer erroneously placed the burden of proof on DOT to show "reasonable assurances," a responsibility that it assertedly had discharged in the permit application process before DER.

   
   

   The court in J.W.C. rejected DOT's claim, stating that generally the burden of proof in an administrative proceeding rests on the party asserting the affirmative. Id. at 788 (citing Balino v. Department of Health & Rehabilitative Servs., 348 So.2d 349, 350 (Fla. 1st DCA 1977)). The court explained that the hearing officer used the term "burden of proof" to mean "burden of persuasion," so that DOT bore the affirmative burden of proving "reasonable assurances" before DER preliminarily and before a hearing officer in formal proceedings. Id. "[W]e can conceive of no more orderly way for a formal hearing to be conducted," the court wrote, "than to have the applicant (who has the ultimate burden of persuasion) first present a `prima facie case.'" Id. Thereafter, the petitioning property owners were responsible for going forward with the evidence to prove the truth of the facts asserted in their petition, failing which the hearing officer must approve DER's action. Id. at 789.

   
   

   Although permit procedures at issue in J.W.C. are factually distinguishable from the bid protest procedures at issue here, the decision supports the hearing officer's procedural handling of the claim in this cause. PROCACCI presented evidence to establish that "neither price guidelines, pre-bid estimates, presently paid lease rates, nor budgeting constraints" justified DLES's decision to reject the three bids that it had not shown to be nonresponsive. Recommended Order at 12. In effect, PROCACCI made a prima facie showing that DLES's decision was invalid, which DLES was then required affirmatively to refute.

   J.W.C. 396 So.2d at 788. For these reasons, I reject DLES's exception.

   
   

   Conclusion of Law No. 13. This conclusion includes the following statement:

   
   

   While it is clear that the employees of [DLES] who made the recommendations and the decisions pertaining to this bid acted in what those employees perceived to be in the

   best interest of the Respondent, the evidence established that [DLES] acted arbitrarily in rejecting all bids for the Lease.

   
   

   Recommended Order at 13. DLES argues that this conclusion contradicts the record and that the hearing officer impermissibly substituted his judgment for that of DLES's employees. I disagree.

   
   

   I note the following General Provision contained within the proposal.

   
   

   The Department reserves the right to reject any and all bid proposals for reasons which shall include but not be limited to the agency's budgetary constraints; waive any minor informality or technicality in bids, to accept that bid deemed to be the lowest and in the best interest of the state, and if necessary, to reinstate procedures for soliciting competitive proposals.

   
   

   Joint Exh. 1 at 9 (emphasis added). There is no doubt that an agency can reject all bids under authority of this provision applicable caselaw. Caber Systs., Inc. v. Department of General Servs., 530 So.2d 325 (Fla. 1st DCA 1988). To be sustained, however, an agency's choice must be supported by a "valid reason." Id. at 338 (emphasis in original).

   
   

   The court in Department of Transp. v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988), stated that the scope of inquiry before an administrative hearing officer is limited to determining whether the agency subverted the purpose of competitive bidding, and that the officer's solitary responsibility is "to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Id. at 914. An agency decision is "arbitrary," as PROCACCI claims here, if it is unsupported by facts or logic. Agrico Chemical Co. v.

   State Dep't of Envtl. Regulation, 365 So.2d 759, 762 (Fla. 1st DCA 1978), cert. denied sub nom. Askew v. Agrico Chemical Co., 376 So.2d 74 (Fla. 1979).

   
   

   I conclude that the hearing officer did not impermissibly substitute his judgment for that of the agency. For reasons stated above, I am unable to conclude that the findings of the hearing officer were not based on competent substantial evidence. 120.57(b)10, Fla. Stat. Although there was no showing that DLES staff acted fraudulently or dishonestly, it failed to offer in this record a valid explanation for its decision.

   
   

   As a final point, I note that the court in Groves-Watkins sustained a decision by the Department of Transportation (DOT) to reject all bids. The court added that "DOT was entitled to regroup, reevaluate, redesign, or reject the project. Such a decision, absent bad faith, cannot be deemed arbitrary or capricious." Groves-Watkins, 530 So.2d at 914. Significantly, DOT rejected all bids for a "valid" reason that appeared on the record. DOT's decision comported with an established policy that allowed the agency to reject all bids, provided the lowest bid exceeded 7% of DOT's official cost estimate, id. at 912 n.1, a circumstance not present in the instant cause.

   
   

3. CONCLUSION

After reviewing the complete record and ruling on all exceptions filed in this matter, it is ORDERED that:

1. Except as otherwise provided in the rulings on exceptions, the Recommended Order of the hearing officer is adopted and incorporated herein by reference into this Final Order.

   
   

2. The DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY shall accept and evaluate the responsive bids submitted for Lease No. 540:0920 and determine the proper recipient for an award of the Lease.

THIS ORDER CONSTITUTES FINAL AGENCY ACTION. JUDICIAL REVIEW OF THIS PROCEEDING MAY BE INSTITUTED BY FILING A NOTICE OF APPEAL IN THE DISTRICT COURT OF APPEAL WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES IN ACCORDANCE WITH SECTION 120.68, FLORIDA STATUTES. SUCH NOTICE MUST BE FILED WITH THE DISTRICT COURT OF APPEAL WITHIN THIRTY (30) DAYS OF THE DATE THIS ORDER IS FILED IN THE OFFICIAL RECORDS OF THE DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY, AS INDICATED IN THE CERTIFICATE OF CLERK BELOW, OR FURTHER REVIEW OF THIS ACTION WILL BE BARRED.

DONE AND ORDERED in Tallahassee, Florida, this 21 day of October, 1992.

JAMES E. BLOUNT, Director

Division of Administrative Services Florida Department of Labor and Employment Security

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Final Order has been furnished by U.S. Mail to Robert A. Sweetapple, Esq., Sweetapple, Broeker & Varkas, P.A., 465 East Palmetto Park Road, Boca Raton, FL 33432, and by hand delivery to Cecilia F. Renn, General Counsel and Edward A. Dion, Assistant General Counsel, Department of Labor & Employment Security, 307 Hartman Building, 2012 Capital Circle SE, Tallahassee, FL 32399, this 27th day of October, 1992.

Nelda J. Atkinson, Agency Clerk

COPIES FURNISHED:

Clerk, Division of Administrative Hearings DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399

Docket for Case No: 92-002650BID

Orders for Case No: 92-002650BID